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Coal India to issue two tenders for imported coal to address local shortage

Coal India COAL.NS, the world’s largest coal miner by output, will issue a short-term and a medium-term tender next week to import coal for utilities, two senior officials at the company said, as shortages raise concerns about renewed power outages.

The state-run miner, which has little experience in importing coal, was asked to place orders for shipments from overseas by the power ministry last week as utilities suggested multiple tenders would lead to confusion and sought centralised procurement through Coal India.

Indian officials are rushing to make more coal available for utilities as shortages in the July-September quarter are expected to be 15% wider than intitially estimated due to expectations of higher power demand.

The short-term tender will seek delivery of imported coal between July and December, while the medium term tender will demand supplies between July 2022 to June 2023, the officials, who did not wish to be identified, said.

The tenders will be placed on a business-to-business (B2B) basis, as government-to-government (G2G) imports – suggested by the power ministry last week – would delay the process, the officials said.

Coal India plans to issue the tenders by June 7, the officials said, adding that the decision to import was approved by the company’s board on Thursday.

India has rolled back a policy to cut thermal coal imports and plans to reopen closed mines to address rising power demand. Coal accounts for nearly 75% of India’s power output and Coal India produces 80% of domestic coal.

A decision on the quantity of imports, the quality of coal and destination ports would be taken after consulting the federal power ministry, the official said, adding that the deadline for states to submit their requirements to the power ministry had been extended to June 3 from May 31.

Importers would be free to choose the country from which they want to import, the officials said.

Indonesia, Australia and South Africa are top suppliers of thermal coal to India, the world’s second largest coal importer despite being the second biggest producer behind China.
India faced its worst power crisis in over six years in April due to higher electricity demand, despite record production by Coal India during the year ended March 2022.

Coal India has previously blamed lower output from import-based coal plants, adding that fewer imports put more pressure on domestic mining.

The power ministry had estimated utilities’ total requirement of imported coal to blend with domestic fuel to be 58.7 million tonnes this year, but the tendered quantity could be lower, one of the officials said.
Source: Reuters (Reporting by Sudarshan Varadhan; Editing by Susan Fenton)

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